Darvas-ADL Multi-Timeframe Breakout

Family: breakout · Regime: trending · Complexity: medium · Asset classes: Equities, Forex, Crypto · Timeframes: H1, H4

Thesis

The strategy assumes that significant market moves begin with a period of price consolidation (Darvas Box) and that breakouts from these boxes are high-probability entries when volume (ADL) and broader market trends (SMA/MTF Dashboard) align. The core edge lies in filtering 'trap' breakouts by requiring multi-timeframe and volume confirmation, while using market structure (ZigZag) to define objective exit points.

Components

• Parabolic SAR (Standard) (regime) — Used as a regime filter to ensure the immediate momentum is aligned with the breakout direction and provides a secondary trailing exit logic.
• Simple Moving Average (SMA) (direction) — Acts as the primary trend filter; trades are only taken in the direction of the 50-period slope and price relation.
• Darvas Boxes MetaTrader 5 (entry) — Identifies formal consolidation ranges; the 'breakout' of the box top or bottom serves as the trigger for entry.
• RSI Area (Histogram) (exit) — Provides a momentum-based exit signal. When the histogram shows overextension (OB/OS) and begins to retracing, the position is closed to capture the meat of the move.
• ZigZag+ v5 (risk) — Defines objective market structure pivots for stop-loss placement and position sizing, ensuring risk is pegged to the most recent swing high/low.
• Accumulation/Distribution Line (confirmation) — Confirms the breakout with volume data; ensures that price movement is supported by actual accumulation rather than low-liquidity spikes.
• Multi Timeframe Moving Average Dashboard (volatility_filter) — Filters for broad market alignment across higher timeframes (H4, D1) to prevent trading against the 'big picture' trend.

Known failure conditions

• Price consistently breaches Darvas Boxes without following through, resulting in a 'box-bound' oscillation.
• ADL slope remains flat or diverges significantly from price during a breakout, indicating lack of institutional participation.
• The MTF Dashboard shows conflicting signals (e.g., H1 Bull vs D1 Bear) for more than 48 hours, suggesting a regime shift.

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